The term of trade can be expressed as
Question 1 Report
The term of trade can be expressed as
Answer Details
The correct answer is (4) (Price index of export ÷ Price index of import) × 100.
The term of trade refers to the ratio of the price index of a country's exports to the price index of its imports. In other words, it measures the amount of imports that a country can purchase for a unit of its exports. A higher term of trade means that a country can purchase more imports for a given quantity of its exports, while a lower term of trade means that it can purchase fewer imports.
To calculate the term of trade, we need to divide the price index of a country's exports by the price index of its imports and then multiply the result by 100 to express it as a percentage. So, the formula for the term of trade is (Price index of export ÷ Price index of import) × 100.
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